ORDER Re: Plaintiff's Motion for Summary Judgment, or, in the Alternative, Partial Summary Judgment [57]

RONALD S.W. LEW, Senior District Judge.

Currently before the Court is Plaintiff Ford Motor Company's ("Plaintiff") Motion for Summary Judgment, or, in the Alternative, Partial Summary Judgment [57] ("Motion").

The Court, having reviewed all papers submitted and pertaining to Plaintiff's Motion [57], NOW FINDS AND RULES AS FOLLOWS: The Court GRANTS Plaintiff's Motion for Summary Judgment [57] in its entirety.

I. FINDINGS OF FACT

1. Plaintiff Ford, a Delaware corporation with its principal place of business in Michigan, manufactures new motor vehicles bearing the Ford and Lincoln brand names. Joint Stip. Facts ("Stip. Facts") ¶¶ 1, 6, ECF No. 43 (undisputed).1

2. Defendant Titan Enterprise Inc. ("Defendant") is a California corporation with its principal place of business in California. Id. at ¶ 2 (undisputed).

3. The Court has subject matter jurisdiction over this Action under 28 U.S.C. § 1332, and personal jurisdiction over Defendant. Id. at ¶¶ 3-4 (undisputed).

4. Venue is proper in the Central District of California pursuant to 28 U.S.C. § 1391(a). Id. at ¶ 5 (undisputed).

3. Plaintiff offers incentive programs to qualified individuals and businesses to, among other things, encourage high-volume purchases of Ford vehicles. Id. at ¶ 7 (undisputed).

4. One such incentive program is Plaintiff's Competitive Price Allowance Program ("CPA"), through which Plaintiff provides discounts to qualified high-volume purchasers of Ford vehicles through the Ford Fleet Program. Id. at ¶ 8 (undisputed).

5. On September 18, 2013, Plaintiff and Defendant voluntarily executed a CPA Contract for the 2014 Program Year. Id. at ¶ 9 (undisputed).

6. Pursuant to the CPA Contract, Plaintiff provided discounts to Defendant in exchange for Defendant's purchase of large numbers of Ford vehicles (the "Vehicles" or "Ford Vehicles"). Id. at ¶ 13 (undisputed). Defendant agreed that, to be eligible for any discounts, the Vehicles must be operated solely in the United States and could not be exported. Id. at ¶ 14 (undisputed).

7. The export prohibition is found in several of the CPA Contract's provisions, including:

8. Plaintiff told Roger Catoire, an employee of Defendant who served as Defendant's primary negotiator of the CPA Contract, that pursuant to the "In-Service Requirements," Vehicles purchased under the CPA Contract must be operated in the United States. Id. at ¶¶ 12, 15 (undisputed). Mr. Catoire understood that this meant that the vehicles could not be exported. Id. (undisputed).

9. In 2014, Defendant purchased 185 Vehicles under the CPA Contract. Id. at ¶ 16 (undisputed).

10. Plaintiff fulfilled its obligations and duties owed to Defendant under the CPA Contract by, among other things, manufacturing, delivering, and discounting the Vehicles purchased under the CPA Contract. Id. at ¶ 17 (undisputed).

11. Defendant received discounts from Plaintiff totaling $823,000 for the Vehicles purchased under the CPA Contract. Id. at ¶ 18 (undisputed).

12. Defendant did not operate the Vehicles solely in the United States. Id. at ¶ 19 (undisputed). Less than 12 months after receiving the Vehicles, Defendant exported to China all of the Vehicles purchased under the CPA Contract. Id. at ¶ 21 (undisputed).

13. Defendant did not comply with the "12-month or 20,000 mile" "In-Service Requirements" provision under the CPA Contract. Id. at ¶ 20 (undisputed).

14. Plaintiff demanded that Defendant return the $823,000 in discounts it received pursuant to the CPA Contract. Id. at ¶ 22 (undisputed).

15. Defendant refused to return any amount to Plaintiff. Id. (undisputed).

16. Defendant agrees that the CPA Contract is legally binding and valid, except for the export prohibition. Id. at ¶ 23 (undisputed).

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56 states that a "court shall grant summary judgment" when the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "The party moving for summary judgment has the initial burden of proof to show "no genuine dispute as to any material fact." Fed. R. Civ. P. 56(a); In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir. 2010). "A party asserting that a fact cannot be . . . genuinely disputed must support the assertion by: citing to particular materials in the record, including . . . stipulations." Fed. R. Civ. P. 56(c)(1)(A). "In determining any motion for summary judgment . . ., the Court may assume that the material facts as claimed and adequately supported by the moving party are admitted to exist without controversy except to the extent that such material facts are (a) included in the `Statement of Genuine Disputes' and (b) controverted by declaration or other written evidence filed in opposition to the motion." Local Rule 56-3.

Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case. In re Oracle Corp., 627 F.3d at 387. If the moving party meets this burden, the burden then shifts to the non-moving party to produce admissible evidence showing a triable issue of fact. Id.; Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000); see Fed. R. Civ. P. 56(a).

III. BACKGROUND

A. Factual Background

Plaintiff is a motor vehicle designer and manufacturer. First Am. Compl. ("FAC") ¶ 7, ECF No. 23; Stip. Facts ¶ 1. Plaintiff offers incentive programs, such as its Competitive Price Allowance ("CPA") Program, which "provides discounts or credits to qualified high-volume purchasers of Ford vehicles through the Ford Fleet Program." FAC ¶ 9; Stip. Facts ¶¶ 7-8. On September 18, 2013, Plaintiff and Defendant executed a CPA Contract.2 FAC ¶ 10; Stip. Facts ¶ 9. Under the CPA Contract, Plaintiff agreed to provide discounts to Defendant in exchange for Defendant's purchase of large numbers of Ford vehicles. FAC ¶ 13; Stip. Facts ¶ 13. The CPA Contract states: "Titan Enterprise Inc. must acquire 250 units during the course of the program year [i.e., the calendar year]. In the event this volume has not been reached, you will be required to reimburse Ford all or a portion of the CPA funds paid." FAC ¶ 14 (citing CPA Contract, p. 3). The CPA Contract also contained terms3 requiring that, in order to be eligible for any discounts, Defendant's purchased vehicles must be operated in the United States and could not be exported. FAC ¶ 15; Stip. Facts ¶¶ 14-15. Specifically, the "In-Service Requirements" provision states: "The minimum in-service requirement for commercial vehicles is 12 months or 20,000 miles (whichever comes first). Vehicles must be registered and operated solely in the 50 United States."4 Stip. Facts ¶ 14b (citing CPA Contract, p. 4, "In-Service Requirements").

In 2014, Defendant purchased over 185 vehicles from Ford ("Ford Vehicles" or "Vehicles"). FAC ¶¶ 18-19; Stip. Facts ¶ 16. Defendant received combined discounts totaling $823,000. FAC ¶¶ 18-19; Stip. Facts ¶ 18.

In May 2014, "[Plaintiff's] personnel verified that dozens of Ford Explorers purchased by [Defendant] pursuant to the CPA Contract were [] found at a port of entry in mainland China." FAC ¶ 20; see Stip. Facts ¶ 21. On June 17, 2014, Jim Chen, president of Defendant Titan Enterprise Inc., allegedly "admitted to [Plaintiff] that he exported to China some or all of the Ford Explorers [Defendant] purchased pursuant to the CPA Contract." FAC ¶ 23; Stip. Facts ¶ 21. Defendant also allegedly failed to purchase at least 250 vehicles, as required by the CPA Contract. FAC ¶ 21. The parties stipulated that Defendant did not comply with the "In-Service Requirements" provision of the CPA Contract. Stip. Facts ¶ 20.

B. Procedural Background

On October 3, 2014, Plaintiff filed its Complaint [1], alleging claims for breach of contract and fraud. On January 27, 2015, Plaintiff timely filed its FAC [23], which amended the Complaint to state only a claim for breach of contract.

On February 17, 2015, Defendant filed a Motion to Dismiss [20] under Federal Rule of Civil Procedure 12(b)(6), which this Court denied [32].

On May 7, 2015, Defendant filed its Answer to the First Amended Complaint [36]. In its Answer, Defendant asserted twelve affirmative defenses.

On August 27, 2015, the parties filed a Joint Motion for Order: (1) Modifying the Scheduling Order, and (2) Granting Leave to Amend Defendant's Answer to First Amended Complaint [39]. The Court granted Defendant leave to amend its Answer to withdraw all affirmative defenses except the defense that the no-export clause in the CPA Contract is an undue restraint of trade. Order 2:4-7, ECF No. 40. The Court also granted the parties' joint stipulation that only facts contained in the Joint Stipulated Facts may be relied on for purposes of summary judgment. Id. at 2:9-13.

On September 8, 2015, the parties filed their Joint Stipulated Facts [43]. Exhibit 1 to the Stipulated Facts [56] contains the parties' confidential CPA Contract, which was filed under seal. On September 15, 2015, Defendant filed its Amended Answer to the First Amended Complaint [51], which asserted its sole affirmative defense that the no-export clause of the CPA Contract is an undue restraint of trade.

On October 16, 2016, Plaintiff filed the present Motion [57] and Statement of Uncontroverted Facts [58]. The Opposition [59], Statement of Genuine Disputes [60], and Reply [61] were timely filed. The hearing was set for December 1, 2015 [57], and the matter was taken under submission on November 23, 2015 [62].

IV. DISCUSSION

A. Breach of Contract Claim

Under California law, the essential elements of a claim for breach of contract are (1) the existence of a contract, (2) Plaintiff's performance or excuse for nonperformance, (3) Defendant's breach, and (4) resulting damages to Plaintiff. San Mateo Union High Sch. Dist. v. Cnty. of San Mateo, 152 Cal.Rptr.3d 530, 548 (Cal. Ct. App. 2013); Greenwich Ins. Co. v. Rodgers, 729 F.Supp.2d 1158, 1163 (C.D. Cal. 2010).

"[T]he measure of damages . . . is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom." Cal. Civ. Code § 3300. The aim of contract damages is to put the injured party in as good a position as he or she would have been had performance been rendered as promised. PAI Corp. v. Integrated Science Solutions, Inc., No. 06-CV-05349-JCS, 2015 WL 2265671, at *5 (N.D. Cal. May 13, 2015). "Where the fact of damages is certain, the amount of damages need not be calculated with absolute certainty." GHK Assocs. v. Mayer Grp., Inc., 274 Cal.Rptr. 168, 179 (Cal. Ct. App. 1990).

Here, the parties explicitly stipulated to each of the elements for breach of contract except damages. First, the parties voluntarily entered into a valid CPA Contract whereby Plaintiff agreed to provide discounts to Defendant in exchange for Defendant's purchase of large numbers of Ford Vehicles and adherence to the terms of the CPA Contract. Stip. Facts ¶¶ 9, 23. Defendant agreed that, to be eligible for any discounts, the Vehicles had to be operated in the United States and could not be exported. Id. at ¶ 14. Defendant stipulates that, except for the export provision, the CPA Contract is legally binding and valid. Id. at ¶ 23.

Second, Plaintiff fulfilled its obligations under the CPA Contract by, among other things, discounting the Vehicles Defendant purchased pursuant to the CPA Contract. Id. at ¶ 17.

Third, the "In-Service Requirements" provision of the CPA Contract required Defendant to operate the Vehicles solely in the 50 United States, and Defendant stipulated that it understood that the "In Service Requirements" provision of the CPA Contract meant that the vehicles could not be exported. Id. at ¶¶ 14-15. Thus, Defendant breached the CPA Contract when it did not operate the Ford Vehicles solely in the United States, as required by the minimum "In Service Requirements" provision of the CPA Contract. Id. at ¶¶ 19-20.

As to damages, Plaintiff demands the return of the $823,000 in discounts. Id. at ¶ 22. The Court finds that $823,000 will put Plaintiff in as good a position had performance been rendered as promised. See Cal. Civ. Code § 3300; PAI Corp., 2015 WL 2265671, at *5. The parties stipulated that Defendant received $823,000 in discounts for the Ford Vehicles Defendant purchased pursuant to the CPA Contract. Stip. Facts ¶ 18. Defendant received this discount in exchange for its adherence to certain restrictions, including a minimum purchase requirement and a prohibition on exporting. Since Defendant did not comply with the restrictions, Defendant is not entitled to the discount. Moreover, the CPA Contract provides for the possibility of fleet incentive chargebacks if the "In-Service Requirements" are violated. See CPA Contract, p. 4. In this case, the fleet incentive amounted to $823,000. Because Defendant failed to comply with the conditions of the CPA Contract, Defendant is required to pay the full price for the Ford Vehicles to put Plaintiff in the same position had Defendant performed under the CPA Contract as promised.

As to Plaintiff's breach of contract claim, Plaintiff shows that there is no genuine dispute as to any material fact, and Plaintiff is entitled to judgment as a matter of law. Accordingly, the Court GRANTS Plaintiff's Motion as to its claim for breach of contract.

B. Undue Restraint of Trade Affirmative Defense

Section 1 of the Sherman Act prohibits "[e]very contract, combination . . . or conspiracy, in restraint of trade." 15 U.S.C. § 1. Under antitrust law, "[r]estraints imposed by agreement between competitors have traditionally been denominated as horizontal restraints, and those imposed by agreement between firms at different levels of distribution as vertical restraints." Bus. Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 730 (1988). A vertical nonprice restraint is judged under the "rule of reason." Id. at 735-36.

The rule of reason "requires the antitrust plaintiff to demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive." California v. Safeway, Inc., 651 F.3d 1118, 1133 (9th Cir. 2011) (quoting Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006)) (internal quotation marks omitted). "Under this rule, the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition." Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885 (2007) (quoting Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977)). Factors to take into account include (1) "specific information about the relevant business," (2) "the restraint's history, nature, and effect," and (3) "[w]hether the businesses involved have market power." Id. at 885-86 (internal citations omitted).

Here, on Plaintiff's Motion for Summary Judgment, Defendant bears the burden of proof on its affirmative defense. In re Oracle Corp., 627 F.3d at 387. The Court finds that Plaintiff has shown that there is no evidence to support Defendant's affirmative defense because the Joint Stipulated Facts5 contain no evidence that the CPA Contract created a manufacturer-dealer like relationship between Plaintiff and Defendant or that the no-export clause is anticompetitive. See id.; Safeway, 651 F.3d at 1133. Moreover, Defendant has not met its burden of producing admissible evidence showing a triable issue of fact. In re Oracle Corp., 627 F.3d at 387.

In its Opposition, Defendant makes two arguments. Defendant first argues that the CPA Contract cannot be construed as a prohibition on exporting the Vehicles. Def.'s Opp'n 9:9-12. This argument is misplaced. A plain reading of CPA Contract clearly states the vehicles must be operated in the United States, and therefore cannot be exported. The CPA Contract term requiring that "Vehicles must be registered and operated solely in the 50 United States" is the equivalent of a prohibition on the Vehicles' export outside the United States.

Defendant's second argument is that the no-export clause cannot be reasonable because Defendant's exporting the Vehicles does not compete with or injure Plaintiff. Def.'s Opp'n 9:18-21. However, in order to survive summary judgment, Defendant must present admissible evidence showing a triable issue of fact that the no-export clause has an anticompetitive effect, not that Defendant's violation of the no-export clause did not compete with Plaintiff. It does not follow that because Plaintiff did not sustain damages due to Defendant's exporting the Vehicles, the no-export clause has adverse anticompetitive effects, and is therefore, an unreasonable restraint of trade.

Under the rule of reason, Plaintiff has shown that there is no evidence that the CPA Contract created a manufacturer-dealer or a broker-like relationship between Plaintiff and Defendant. The CPA Program provides discounts or credits to high-volume purchasers of Ford vehicles, in exchange for agreeing to the restriction that the vehicles must be operated in the United States and could not be exported. Stip. Facts ¶¶ 7-8, 14. The Stipulated Facts provide no evidence that the CPA Program intended to place the Vehicles for resale into the stream of commerce. Accordingly, there is no evidence that the CPA Contract created a manufacturer-dealer or a broker-like relationship between Plaintiff and Defendant.

Second, even if such a relationship was shown, and assuming the "In-Service Requirements" provision constitutes a restraint, the restraint would be a vertical restraint subject to the "rule of reason." Bus. Electronics Corp., 485 U.S. at 735-36. Under the "rule of reason," Plaintiff has shown that there is no evidence to support that the no-export provision "should be prohibited as imposing an unreasonable restraint on competition." Leegin Creative Leather Prods., Inc., 433 U.S. at 49. The Stipulated Facts make no mention of any relevant factors or circumstances suggesting that the no-export clause has any anticompetitive effect. As Plaintiff notes, Defendant has not (1) defined the relevant market, (2) shown that Plaintiff has any market power in any relevant market, or (3) shown how the "In-Service Requirements" have or possibly could restrict output and raise prices to consumers in the United States. Pl.'s Mot. 7:15-18.

Accordingly, the Court finds that (1) Plaintiff has met its burden to prove that there is an absence of evidence to support Defendant's affirmative defense, and (2) Defendant has not met its burden to produce admissible evidence showing a triable issue of fact. For these reasons, Plaintiff's Motion [57] is GRANTED and the affirmative defense DISMISSED.

V. CONCLUSION

Based on the foregoing, the Court GRANTS Plaintiff's Motion for Summary Judgment [57] in its entirety. Judgment in favor of Plaintiff Ford Motor Company and against Defendant Titan Enterprise Inc. shall be entered accordingly.

IT IS HEREBY ORDERED that Plaintiff shall submit a proposed judgment within ten (10) days of the date of this Order.

IT IS SO ORDERED.